Switch from Leighton to Downer EDI: RBC

This is an edited selection of today’s best postings on Street Talk, which is updated throughout the day on AFR.com.

RBC Capital Markets has forecast Downer EDI could benefit from funds switching away from Leighton Holdings following corruption allegations, raising its price target on the stock to $5.25 from $4.80.

“With Downer’s largest peer receiving negative press around alleged corruption, particularly in the Middle East, this could result in a changing register at Leighton," RBC said, pointing out Downer also offers contract mining and construction services. “Downer would make a logical switch for funds that are unable or reluctant to hold a stock with litigation risks."

Downer may also be better positioned to win work when competing against Leighton if the cost difference in its tender is not material while the allegations are resolved, the bank added.

RBC also forecasts Downer stands a good chance of winning large electrical contracts on the Wheatstone and Ichthys LNG projects as well as state road maintenance contracts.